India is a ~$1 Tn retail market, out of which 85% still flows through mom & pop stores, only 2% of this market is digitised
In a competitive market, your solution not only must stand out but also solves a real pain point
Identifying operational leverage points can have huge impacts and it can vary from managing supply networks to improving consumer acquisition techniques
Building a startup is hard; building one that weathers a downturn can almost sound mythical. It is akin to bare hands rock climbing, one slip and…
The entrepreneurial journey is fraught with challenges, from finding the right product-market fit (PMF) to acquiring paying customers and securing funding.
Often, startups face the challenge of identifying and matching the market demands until they find the right formula. Even with the right product line, retaining customers becomes a challenging task.
Furthermore, acquiring funds from investors, particularly in a competitive market where investors are apprehensive. Economic downturns intensify these challenges, increasing the pressure on businesses to adapt and survive.
Here are a few top-of-mind thoughts that can improve the chances of your start-up weathering a storm:
Are You Solving A Large Enough Problem?
The key to a successful startup involves addressing a bigger and more important problem. Startups that tackle large issues have a bigger market and can attract more customers, even during tough times. India is a large market, with a growing economy and complex distribution.
India is a ~$1 Tn retail market, out of which 85% still flows through mom & pop stores, only 2% of this market is digitised. By 2030 this digitised market is supposed to reach ~$127 Bn suggested by various reports.
In every market research lies an opportunity to find out the main pain points affecting a lot of people. By making sure your product or service solves a critical need, you position your startup as essential, which helps keep demand steady during economic slumps.
Does Your Solution Give You The Right To Exist?
In a competitive market, your solution not only must stand out but also solves a real pain point. Information asymmetry in any value chain gives a large scope to create a valuable solution.
It should offer clear and compelling value to your customers. This distinct value proposition not only validates your startup’s existence but also fosters consumer loyalty. Keep getting feedback from users and refining your offering to make sure it stays relevant and better than alternatives.
Standing out is crucial for maintaining a strong market position, especially when customers are more careful with their spending. Moreover, the online shoppers in India are expected to reach 220 Mn by 2025, this indicates the potential startups have to reach the masses in the online buyer segment.
Do You Have Multiple Revenue Streams?
Relying on just one source of income can be risky, especially when the economy is unstable. Look at large successful startups like Zomato or Ola, they have diversified strategically building on their core strengths and now have multiple revenue streams.
To make your business stronger, try to have different ways of making money. Look into new products, services, or markets.
By offering more services, entering new markets, or creating new products, you spread the risk and keep cash flow steady. Relevant Diversification not only protects your business but also opens up new growth opportunities.
Tight Control On Unit Economics
With growth, it is also imperative to keep a check on unit economics that includes the cost of production and delivery to remain profitable. Regular cost checks and optimisation without hampering the quality helps to keep the business profitable and ensure that the operations run smoothly.
Know Your Operational Leverage
Identifying operational leverage points can have huge impacts and it can vary from managing supply networks to improving consumer acquisition techniques. Emphasising on these points can improve efficiency and save costs. Such practices help to scale the business sustainably and make timely strategic alterations in response to market change.
Have A Culture Of Frugality
The culture of frugality encourages the staff to be mindful of the budgets and look for cost effective solutions. It ensures efficient utilisation of resources which has a positive impact during economic downturns. Encouraging remote working, outsourcing on non-core services and negotiating with the suppliers, a frugal mindset builds a sustainable business model.
Have A Minimum Of 24 Months Cash In The Bank
Maintain a cash reserve that can cover at least 24 months of operational expenses, this allows the founder/s to focus on experimenting or creating more value for the customers it helps pull through the economic downturn period.
This ensures that the operations are not pressured by revenue cuts and buys time to strategise. To maintain this buffer, evaluate your financial estimates regularly and alter spending accordingly.
Do Not Overlook Compliance & Governance
When starting a new business and juggling multiple roles, compliance and governance sometimes are overlooked. However, having robust rules in place is crucial. They help you avoid legal issues and build trust with investors, customers and other important people. Setting clear rules and reviewing them often ensures that they are adhered to. Good rules also improve your business’s reputation, making it more appealing to investors and partners, especially during difficult times.
Build A Team That Is Flexible & Resilient
The team is the biggest asset of any company. Creating a conducive environment for the team and ensuring that the workforce is dynamic as well as resilient to changes and confronting issues straight on.
Encourage a culture of open communication, constant learning and collaboration. Enhancing skills that help employees push through difficult times. A robust, adaptive staff can develop and propel your startup forward amid economic downturns.
Have A Network Of Mentors
Build a group of mentors and advisors who have experience navigating through economic downturns. Their advice can help make good decisions, avoid common mistakes and find new opportunities.
Keep in touch with the mentors, seek their advice on important issues and use their connections for help and resources. A strong mentor network can give you the guidance and confidence you need to lead your startup through hard times.
Above all: Have a Purpose. This purpose should be the driving force behind every decision, action and most importantly what opportunities to say ‘NO’ to. It gives your team a clear direction and a reason to push through tough times. A strong sense of purpose can inspire and motivate your team, attract like-minded customers and differentiate your brand in the marketplace.
Regularly revisit and reinforce your startup’s mission to ensure it remains aligned with your goals and market needs.
